It has been widely reported over the last week that some of the biggest names in bookkeeping are moving their businesses offshore to escape the tax rate of 15% that UK companies currently adhere to.
Leave it all behind
With other countries offering a minimum taxation rate of as little as 1.5% , their offshore competitors more are able to divvy out profits on important matters such as advertising and player retention and so have a considerable advantage over their UK competitors. In the light of these hard figures it’s no surprise that names such as William Hill and Ladbrokes have recently decided to make the move. William Hill and it’s bingo site William Hill Bingo will be moving to Gibraltar to escape the cost while independent Sky Bet has already moved offshore and is now based in Guernsey.
Global markets easier and cheaper to reach
With William Hill having announced that it paid the Government £300m in taxes last year alone, it is clear that savings to the company will be considerable once its base is outside of the UK. Speaking of the move, Ralph Topping the group’s Chief Executive said that, “Having acquired European-focused web sites, global marketing and multi-lingual customer services capabilities, this is the logical next step in our development of this business”
Ladbrokes Bingo and it’s bookkeeping base has also announced its intentions to move as a response to the William Hill move. Chris Bell, Ladbrokes Chief Executive had this to say of the move “Ladbrokes.com is the biggest in the UK market but faces aggressive competition from offshore operators who hold a very significant cost advantage by operating from low-tax jurisdictions. Operating from the UK has become unsustainable.”
Where will the money come from?
The question on many a finance expert’s lips this week is what effect these announcements will have for the long term to the Treasury’s annual tax revenue. A short fall that will far exceed such a huge amount is sure to produce considerable embarrassment for the Treasury, but what we have to consider is what will be the long term implications for online bingo?
With live bingo already suffering so much under the pressure of the massive 22% taxation rate, it could be that in the next Budget we see a further rise in cost for online bingo and a further exodus of gaming companies from the UK in the light of such high costs. Since so many of the sites UK players currently favour are already based in Gibraltar and on the Isle of Man, the future does not look good for those already struggling with the cost of UK gaming.